PROBLEM 13 – 1

What is the estimated cost of inventory on March 31?

Inventory - January 1 650,000

Purchases 3,200,000
Freight in 50,000
Purchase return (75,000) 3,175,000
Goods available for sale 3,825,000
Cost of goods sold
Net sales 4,500,000
Multiply by: Cost ratio 60% (2,700,000)
Ending inventory ₱ 1,125,000.00

PROBLEM 13 – 2

What is the estimated cost of missing inventory at year-end?

Beginning inventory 650,000

Purchases 2,300,000
Freight in 60,000
Purchase returns (80,000) 2,280,000
Goods available for sale 2,930,000
Cost of goods sold
Sales 3,400,000
Sales returns (30,000)
Net sales 3,370,000
Multiply by: Cost ratio 70% (2,359,000)
Ending Inventory 571,000
Physical Inventory   (420,000)
Missing inventory ₱ 151,000.00

PROBLEM 13 – 3

What is the estimated cost of goods sold for the current year?

Sales 5,600,000
Sales returns (400,000)
Net sales 5,200,000
Multiply by: Cost ratio 75%
Cost of goods sold ₱ 3,900,000.00
PROBLEM 13 – 4

What is the estimated amount of fire loss?

Inventory - January 1 1,100,000

Purchases 6,000,000
Goods available for sale 7,100,000
Cost of goods sold
Net sales 7,280,000
Divided by: Cost ratio 130% (5,600,000)
Inventory - September 30 1,500,000
Physical Inventory (100,000)
Inventory - Fire Loss ₱ 1,400,000.00

PROBLEM 13 – 5

What is the cost of goods available for sale?

Beginning inventory 5,000,000

Purchases 26,000,000
Freight in 2,000,000
Purchase returns and allowances (3,500,000)
Purchase discounts (1,500,000)
Goods available for sale ₱ 28,000,000.00

What is the cost of goods sold?

Sales 40,000,000
Sales returns (3,000,000)
Net sales 37,000,000
Multiply by: Cost ratio 60%
Cost of goods sold ₱ 22,200,000.00

What is the estimated cost of inventory shortage?

Goods available for sale 28,000,000

Cost of goods sold (22,200,000)
Ending inventory 5,800,000
Physical inventory (4,000,000)
Goods out on consignment 1,000,000
Multiply by: Cost ratio 60% (600,000)
Inventory shortage ₱ 1,200,000.00
PROBLEM 13 – 6

What amount should be reported as inventory fire loss?

Sales - 2019 6,000,000

Purchases 5,600,000
Purchase return (100,000)
Net purchases 5,500,000
Inventory - 2019 (1,000,000) (4,500,000)
Gross profit 1,500,000
Divided by: Sales - 2019 6,000,000
Ratio - 2019 25%
5%
Ratio - 2020 30%

Beginning inventory - 2020 1,000,000

Purchases 8,000,000
Purchase return (500,000) 7,500,000
Goods available for sale 8,500,000
Sales 9,000,000
Multiply by: Cost ratio - 2020 70% (6,300,000)
Ending inventory - 2020 2,200,000
Undamaged merchandise 500,000
Multiply by: Cost ratio - 2020 70%
350,000
Realizable value of damaged merchandise 10,000 (360,000)
Inventory fire loss ₱ 1,840,000.00

PROBLEM 13 – 7

What is the balance accounts receivable at year-end?

Purchases 7,000,000
Ending inventory (1,400,000)
Cost of goods sold 5,600,000
Divided by: Cost ratio 140%
Sales 7,840,000
Collection (4,000,000)
Accounts receivable - end ₱ 3,840,000.00
PROBLEM 13 – 8

What is the amount of fire loss to be recognized on September 30, 2020?

Net sales Cost of goods sold

2017 1,000,000 710,000
2018 3,000,000 2,200,000
2019 5,000,000 3,840,000
Total 9,000,000 6,750,000
Average 3,000,000 2,250,000
Average gross profit rate 25%
Cost ratio 75%

Beginning inventory 660,000

Net purchases 4,240,000
Goods available for sale 4,900,000
Net sales 5,600,000
Multiply by: Cost ratio 75%
Cost of goods sold (4,200,000)
Ending inventory 700,000
Undamaged goods 60,000
Multiply by: Cost ratio 75%
45,000
Realizable value of damaged goods 25,000 (70,000)
Inventory - fire loss ₱ 630,000.00